Business Survival Kit
The good times don't last forever, but neither do the bad. Much like
the weather, these are the cycles that small business owners have
little control over when they happen, yet must make the most of them as
you don't have control over the timing, you do have control
over the fundamentals of how you'll run your business and adapt to the
challenges ahead. There's also an opportunity for you to grow during
this period if you're able to make the right choices, take the
appropriate action, and keep your eye on the things that matter most to
the health of your small business.
January 1985 and I was into my third full month of a being a
young 23 year-old radio station manager when I received a call that
would define the next 2 years. Our second biggest advertising account
(a bank) had foreclosed on our largest advertising account (a farm
implement dealership) with the assistance of the county sheriff,
several chains and padlocks. I didn't know it at the time but we were
about to enter what was to be known as the "farm crisis" and it was not
a fun time to be in business in a small Iowa town. This was the baptism
of fire that I was thrown into as a young inexperienced business
manager. Many lessons and new skills were learned during that time
along with others I acquired from the cycles that were yet to come.
From those experiences, I'd like to share with you my "Survival Kit" to
help you with the days ahead.
Your Core Business:
Now is the time to use solid
business fundamentals. Direct all your efforts into doing what you're
known for and for what you know best. New sales, new customers, and
retaining base dollars from your core business customers will insulate
you from the toughest of times. This will not be the time to branch out
into an unknown area. For example, if you're an electrician and are
known throughout the community as an electrician, this is not the time
to focus your resources such as manpower and advertising dollars in an
area such as "home theater installation" unless you have extensive
experience and a wide, long-term demand for the service. This is not
the time to react to "hunches", however it is the time to focus on the
needs of your customers who make up your core business. If you don't
know who your core business customers are and why they do business with
you, you'll need to identify them quickly before your competition does
and takes advantage of it at your expense.
Strengthen relationships with
your customers, vendors, and employees because these are the people
that will help you get through the bad times. Find ways to recognize
each for their contribution to your business and treat them like
they're worth their weight in gold, because in good times and bad they
are. The exception to this are the deadbeats, i.e. the people who don't
pay you and consistently fail to keep the payment promises that they've
made to you.
3) Cash is
Keeping your cash flow steady is a daily
fundamental which you cannot afford to fail in it's execution. Make
sure your receivables are at a consistent level and that you're taking
proactive action daily to keep it that way. Define your past-due
collection policy and be faithful to it. Review your past-due accounts
daily and take action to collect on past-due accounts as quickly as
possible. Work with people who are keeping their past-due payment
promises, and actively pursue means such as small claims court and
collection agencies for those who break payment promises to you as they
break them. You cannot afford to falter in this area if you are to be a
4) Find New
Ways of Doing Old Things Better: While it's not a
time to venture away from your core business, it is the time to examine
new ways of doing "the things we always do" especially in the areas of
expense control and business efficiency. Perhaps you'll need to find a
new vendor or bring something performed from the outside "in-house" to
save expenses. Or maybe you'll need to "out-source" something which is
consuming manpower hours so you can re-direct them on sales and your
core business. Look for new vendors, new employees, new things, and new
ideas to help you to stay efficient and to keep expenses under control.
One of the old adages of bad
economic times is that "when business is bad, advertising is the first
thing that's cut". That's understandable, but there is a right way to
do it and a wrong way to do it. The wrong way is to cut every media
across the board to the point where you no longer have any repetition
in any media you buy. The right way to do it is to keep the mediums
that either work the best, are the most efficient, or give you the most
repetition for your dollar. To do this you will have to identify and
keep those who do, and identify and completely cut out those who don't.
For example, if print is too expensive for the repetition you're
getting, don't just trim their budget because the result will be that
you'll receive less repetition and page dominance which will make your
investment even less effective. You may need to make the tough decision
to cut them out completely and shift those dollars into another media
where your message will dominate their audience or readership through
advertising repetition. In other words, it's better to have two full
glasses of water than 10 nearly empty glasses. If it's necessary to
trim your advertising budget, don't skimp on the advertising repetition
when you do.
The conventional wisdom for debt
service during slow economic times is to get out quickly, and go in
slowly. Keep an eye on your revolving credit and find ways to keep
dollars in reserve. Acquire new debt only for things that will save you
significant expense or on areas that will
income. Beware of acquiring businesses or absorbing departments that
have a spotty positive cash flow history or are inconsistent performers.
Look For The Fire Sales: The unfortunate reality is
that not everyone will make it. If you're one of the good ones who have
a healthy business you may be able to acquire distressed business
properties for "pennies on the dollar" to add to your structure at the
end of the economic contraction. This strategy is risky if you've never
been through it before, so make sure you only use your "lazy money" and
not your "lunch money" for new acquisitions.
economy contracts, your ability as a small business owner to
make the right choices and take the right action while seeking out new
ideas may be the difference between whether you're open for another
year, another quarter, or another day. If you do the right things, you
not only have the opportunity to survive but to grow and prosper today
and in the future.
the Author, Bill
Grady has over
of marketing and advertising creation, sales,
and management experience.
began selling advertising at age 20, became a radio
Manager at the age of 23, and has personally sold millions of
local advertising over his career.
Bill is a former
President of the Iowa Broadcasters Association and his
National Association of Broadcasters
awards for excellence.
2002, Bill has brought his marketing and advertising knowledge
thousands of small business owners in Iowa, Minnesota, South Dakota,
Nebraska, Kansas and Oklahoma.